What is “lex mercatoria”? How can it be used in the settlement of international commercial disputes? What are its strengths and weaknesses in this role?

The term lex mercatoria is derived from the Latin to mean “merchants’ law”. [1] From a historical perspective, the lex mercatoria was established in order to regulate the business dealings of merchants in particular places, such as markets, fairs, and sea ports. [2] The distinguishing factors of the lex mercatoria from standard local and international laws are fundamental. Firstly, the rules were and remain transnational, meaning that they are not limited by the boundaries sketched out by geographical maps and legal jurisdictions. [3] However, like the codification of the common law in England which continued to pick up pace after the Norman Conquest and the Battle of Hastings and was derived by a collection of the local laws, [4] the lex mercatoria was derived by considering the established rules through which merchants operated. [5] A further difference from the national and local laws is the fact that these rules were derived out of equitable fairness as oppo